Debtors’ Rights Continue to be Eroded by Federal Courts, so State Courts will have to Pick up the Slack


By Attorney Briane Pagel

In the past two years, debtor’s rights have been undermined by a series of court decisions that have made it harder to sue debt collectors in federal court.

The federal Fair Debt Collection Practices Act (“FDCPA”) for 43 years has provided important protections for debtors, placing a variety of restrictions on debt collectors and their lawyers. Among those protections are rules that prohibit debt collectors from claiming to be owed more than they really are, and rules that require debt collectors stop trying to collect from debtors who ask the debt collector to provide information to them about their debt.  In the past, if debt collectors violated the FDCPA, they could be sued in federal or state court, and debtors could be awarded up to $1,000 simply for enforcing the law, even if they themselves had not been harmed.  The debtors’ attorneys would also be paid by the debt collector, rather than the debtor themselves.

Debt collectors have been trying for years to undo this law, and, having apparently been unsuccessful in Congress, have turned to the Courts, where they found a friendlier ear. Federal courts are increasingly dismissing cases for “lack of standing,” claiming that unless a debtor suffered some form of actual harm they cannot sue the debt collector in federal court.

The harm here is that federal courts are far more experienced in handling debt collection cases, which often are more complicated than they seem. Federal courts also are comfortable enforcing the law’s provisions regarding damages (which can include emotional distress damages) and awards of attorney’s fees. Both emotional distress and fee-shifting rulings are relatively uncommon in state courts.

Debt collectors have succeeded in making it harder for debtors to get into federal court, but that does not mean that debtors cannot sue; they will simply have to do so in state court. This will require extra efforts to ensure that state court judges are ready to fully enforce the FDCPA.  If you or someone you know has been struggling with debt collection, contact Lawton & Cates’ consumer lawyers to discuss your options. 

 

Briane Pagel

(608) 282-6200/fax: 282-6252